Ad firm suing Grayson

Rep. Alan Grayson (D-Fla.) has been served with a lawsuit alleging he failed to pay a $20,000 “win bonus” to a Minnesota advertising firm that worked for his campaign last year, POLITICO has learned.

The lawsuit stems from a disagreement between the Grayson campaign and North Woods Advertising, a firm that has worked for politicians including former Minnesota Governors Jesse Ventura and Paul Wellstone.

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Both sides agree that when Grayson hired North Woods to help promote his campaign last year, he promised them a $20,000 payment – commonly referred to as a win bonus – if he emerged victorious in Florida’s eighth congressional district.

Grayson won the campaign and was elected to his first term in Congress – but never paid North Woods the $20,000 win bonus, both sides acknowledge. More than a year later, North Woods has filed suit against Grayson to collect the bonus, and another $50,000 for breach of contract, since Grayson’s campaign hired another advertising firm late in the campaign, allegedly violating an exclusivity clause in the North Woods contract.

Grayson chief of staff Julie Tagen said that the bonus wasn’t paid because North Woods owes the campaign a refund for advertisements that were purchased but never ran on television.

North Woods “massively overcharged us for everything – the most blatant thing was they never gave us a refund for ad-buys that didn’t run,” Tagen told POLITICO. “They wouldn’t send us a refund check – which is unheard of – and that’s what this all stems from. We’ve told them repeatedly: When they send us our refund, we’ll give them their win bonus.”

But Vaughn Juares, business manager and creative director of North Woods, said that all of Grayson’s advertisements ran – meaning no refund was given to them from the TV station – and that they had already sent Grayson evidence proving just that.

“There are absolutely no media refunds whatsoever that are due,” Juares said. “We faxed them 100 pages of affidavits from the station showing no refunds were due. The TV station gave us an affidavit that showed that, and they’ve had it for almost a year, so their claim is totally invalid.”

Scott Randolph, Grayson’s campaign manager, disputed Juares’s assertion that documents were sent, saying the campaign repeatedly asked North Woods for them last year. “To my knowledge they never responded,” Randolph said. “I have never seen the audits.”

Tagen said North Woods is capitalizing on Grayson’s newfound fame, which stems from controversial remarks he recently made about health care reform, among other things.

“I think it’s pretty low of them to try and do something like this,” Tagen said. “I can’t speak for why they would try this, but I think the timing speaks for itself.”

Juares, though, said Grayson’s celebrity status has nothing to do with the lawsuit, and that North Woods has been trying to get Grayson to pay the win bonus for more than a year.

“We sent him a letter long before anyone knew who he was asking him very kindly to follow his obligations – and this was way before he said anything about health care,” Juares said.

North Woods has never filed suit against a client, Juares said, adding that Grayson’s actions left them no choice. “He simply did not keep his agreement. We have a contract that Mr. Grayson knowingly and willingly broke.”

He added that “We made no effort to contact the press” about the lawsuit.

Randolph acknowledged that the campaign hired another firm but says both sides violated the contract. “Alan thinks they didn’t satisfy their part of the contract by not providing the refunds, so their side of the contract hasn’t been fulfilled, either.”